White collar frauds and economic crime costs the country billions of dollars each year, government officials have concluded.

Minister for the Serious Fraud Office Anne Tolley said many Ministries had been working for two years on a "Cost of Economic Crime" report that was due to be presented to cabinet soon.

Tolley, speaking at the inaugural Economic Crime Action Network meeting in Auckland yesterday, said: "Economic crime can range from pro forma invoicing schemes that drain the resources of small businesses and charities, to Ponzi schemes, to fraudulent finance companies that destroy the retirement savings of a generation."

She said the report was unable to generate a firm methodology to precisely calculate the annual cost, but officials had concluded the cost was "likely to be in the region of many billion of dollars per year."

ECAN, a multinational summit featuring fraud investigators from New Zealand, the United Kingdom, the United States and further abroad, heard yesterday whistleblowers were the key to early fraud detection.

Harry Markopolos, the US whistleblower who first exposed US$65 billion Ponzi scheme operator Bernie Madoff, said 46.6 per cent of frauds were detected from tips - mostly from employees of organisations perpetuating frauds.

The United States offered a rewards scheme and statutory protection for whistleblowers, Markopolos said, and urged New Zealand to consider doing likewise.

Simon McArley, the acting chief executive of the Serious Fraud Office, welcomed any initiatives that encouraged people to come forward and said policy tweaks were "in various states of development."

Tolley did not make specific reference to policy changes surrounding whistleblowers in her remarks to the conference, but praised them as "courageous individuals who are willing to speak up when they see something wrong."

Markopolos said in his keynote address financial crime had horrendous consequences and the suicide of fraud victims was under-reported.

The ECAN meeting continues today and tomorrow.

How to spot a Ponzi

Victims typically short of retirement savings goals, desperate to believe in scheme.

Schemes usually involve complex strategies that few investors would understand.

"Black box" strategies are common where transparency is limited to preserve "secret" investing formula.